Indonesia central bank governor Perry Warjiyo steps down in surprise move

JAKARTA – Indonesia’s central bank governor, Perry Warjiyo, stepped down from his role on July 27, a surprise move that analysts said could rattle investors worried about the central bank’s independence and the country’s fiscal management.

President Prabowo Subianto has accepted Warjiyo’s resignation, State Secretariat Minister Prasetyo Hadi told reporters in an early morning press conference, ahead of the opening of financial markets in Jakarta.

Destry Damayanti, a senior deputy governor at Bank Indonesia (BI), has been appointed as interim governor. He said Warjiyo had stepped down for personal reasons.

The rupiah weakened as much as 0.14 per cent to 17,960 per US dollar during early trade, while the main stock index lost as much as 0.68 per cent before flipping to trade higher, gaining 0.26 per cent as at 0209 GMT.

The rupiah closed 0.36 per cent weaker at 18,000 per US dollar – its weakest in more than a week – while the main stock index was down 0.17 per cent at closing.

“Perry Warjiyo’s resignation will likely be taken negatively by the market, given he was a steady pair of hands with a good track record,” said Angus Mackintosh, an ASEAN specialist, at Aletheia Capital in Singapore.

“A lot will depend on who takes over, with Destry, a senior deputy governor, stepping in initially. If Prabowo’s nephew, Thomas Djiwandono, as a deputy governor steps in, the market will regard this with suspicion, given this is a crucial technocratic post and BI should remain independent.”

Prasetyo said Warjiyo submitted his resignation through a letter to the President, but declined to elaborate on his personal reasons. The departing central bank governor could not be reached for comment.

Warjiyo was first appointed as governor in 2018. He was reappointed for a second five-year term in 2023.

BI has been under pressure to support Prabowo’s big-growth agenda, while the rupiah slid to a historic low in June amid global market turmoil and concern over Indonesia’s fiscal management and central bank independence.

Indonesia’s Parliament in June passed sweeping legislation that doubles down on BI’s role to support growth, while empowering lawmakers to make binding recommendations for independent financial regulators and the central bank.

BI “will always ensure the continuity of its duties and authorities” to maintain the stability of the rupiah and financial system to achieve an economic environment that is conducive for growth, Destry told reporters following the announcement of the resignation.

She said BI will continue work in accordance with best practices.

BI surprised markets last week by keeping policy rates unchanged, instead offering new incentives to attract foreign capital inflows aimed at supporting the rupiah.

It had raised rates by a total of 100 basis points since May in a bid to attract foreign inflows to shore up the rupiah.

“The development is expected to become a key focus for financial markets, as investors await the government’s decision on his successor and assess the implications for the continuity of BI’s monetary policy, institutional credibility and overall policy direction,” brokerage Mirae Asset Sekuritas said in a note.

In 2025, the abrupt removal of Indonesia’s influential finance minister Sri Mulyani Indrawati rattled markets, with investors fearing the country’s fiscal credibility could be eroded by Prabowo’s populist and costly spending plans. REUTERS